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Britain will suffer the deepest recession of any of the world’s biggest economies in 2023 as analysts warn that energy bills, high interest rates and bankrupt companies will cause a big drop.
- The British economy will contract by 0.9% this year according to experts
- By comparison, Germany’s economy will fall by 0.7 and France’s by 0.4.
- Experts predict UK business insolvencies will rise 15% by 2023
Britain will suffer the deepest recession among the world’s largest economies in 2023 as it is hit by rising energy bills, high interest rates and a rise in bankrupt companies.
Analysts at insurer Allianz Trade predicted the UK economy will contract 0.9% this year compared with a 0.7% drop in Germany, a 0.4% drop in France and a contraction of 0. .3% in the United States.
The report also warned that businesses in Britain and Europe would suffer a “massive profitability hit” in the coming months from rising energy bills that would not be fully offset by government support measures.
As a result, Allianz forecast UK business insolvencies would rise 15 percent in 2023 to 27,100 as businesses buckle under the weight of higher costs.
Analysts at insurer Allianz Trade predicted the UK economy will contract 0.9% this year compared with a 0.7% drop in Germany, a 0.4% drop in France and a contraction of 0. .3% in the US
Allianz forecast UK business insolvencies would rise 15% in 2023 to 27,100 as businesses buckle under the weight of higher costs.
Meanwhile, analysts expected inflation to remain “uncomfortably high” for the next year, although Britain’s annual pace of price increases would cool to 7.5 percent in 2023 from 9 percent last year.
Overall, Allianz concluded that the global economy was “still headed for a recession” in the coming months, forecasting global growth of just 1.4% by 2023, down from 2.9% last year, before recovering to 2.8% in 2024.
Maxime Darmet, senior economist at Allianz Trade, said global trade “will continue to slow” with the manufacturing sector particularly affected by weaker demand and some companies trying to reduce their inventory levels due to earlier gluts.
The conclusion echoes a warning from Kristalina Georgieva, managing director of the International Monetary Fund (IMF), who has predicted that a third of the world economy will be in recession this year.
Ms Georgieva warned that the US, EU and Chinese economies were slowing down simultaneously and that the growing Covid outbreak in China would slow economic activity around the world.
The comments came after the IMF cut its 2023 growth outlook in October, saying the war in Ukraine, inflation and rising interest rates would hurt the global economy.